Mumbai, October 29, 2026 (Yes Punjab News)
The National Stock Exchange (NSE) has flagged multiple compliance lapses by brokers and authorised persons (APs), including failures to collect margins for margin trading facilities (MTF), misuse of client accounts, deficiencies in fund settlements and weak cybersecurity controls. The violations were identified during inspections conducted between October 2025 and March 2026.
Among the key concerns, the exchange found instances where brokers extended margin trading facilities against ineligible securities, including stocks that did not fall under the eligible Group I category.
The NSE also identified cases in which brokers failed to collect adequate margins from clients despite regulatory requirements mandating that margins be obtained in cash, cash equivalents or eligible securities after applying prescribed haircuts.
The findings come amid rapid expansion in the margin trading facility segment.
According to data compiled by CareEdge Ratings from the NSE and BSE, the MTF book size grew from approximately Rs 96,000 crore in August 2025 to Rs 1.48 lakh crore in August 2026.
The exchange also observed delays and failures in issuing daily margin statements to clients, with several statements containing inaccurate or incomplete information. In addition, some brokers were found to have incorrectly reported margin collections and mark-to-market (MTM) loss collections to the exchange.
In certain cases, client funds were not settled within the prescribed timelines, while material discrepancies were detected in client retention statements.
The inspections further revealed instances where brokers paid out funds exceeding clients’ available credit balances. The exchange also found cases in which penalties imposed for short collection of upfront margins were passed on to clients.
The NSE noted that some brokers had failed to send mandatory SMS and email alerts informing clients about fund transfers during running-account settlements.
Authorised persons were also found engaging in several prohibited activities, including directly receiving or paying client funds, using clients’ credentials to execute trades without proper authorisation and obtaining blanket permissions to trade on clients’ behalf.
Other violations included conducting trades to generate brokerage income, offering fixed or assured returns, entering into profit-sharing arrangements and providing unauthorised portfolio management services.
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